Question 1

Production possibilities tables for two countries,North Cantina and South Cantina:
North Cantina Production possibilities (alternatives) 
  South Cantina Production possibilities (alternatives) 
 
-Refer to the above tables.Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods while South Cantina is producing 2 units of capital goods and 21 units of consumer goods.We can conclude that:

Accepted Answer

A)   North Cantina is fully and efficiently using its resources,but South Cantina is not.
B)   South Cantina is fully and efficiently using its resources,but North Cantina is not.
C)   neither South Cantina nor North Cantina are fully and efficiently using their resources.
D)   both South Cantina and North Cantina are fully and efficiently using their resources.E) B) and D)
F) B) and C)

Question 2

The process by which capital goods are accumulated is known as investment.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements,if any,is correct for a nation which is producing only consumption and capital goods?

Accepted Answer

A)   Other things equal,the more consumer goods a nation produces,the greater will be its future growth rate.
B)   Other things equal,the more capital goods a nation produces,the greater will be its future growth rate.
C)   There is no general relationship between the current division of output between consumer and capital goods and the future growth rate.
D)   None of the above statements is correct.E) B) and C)
F) None of the above

Question 4

At fast-food restaurants:

Accepted Answer

A)   consumers enjoy complete and accurate information.
B)   decisions are usually made by trial and error.
C)   decisions entail comparisons of marginal costs and marginal benefits.
D)   benefits always exceed costs.E) A) and B)
F) B) and C)

Question 5

Which of the following is not correct? A typical production possibilities curve:

Accepted Answer

A)   indicates how much of two products a society can produce.
B)   reveals how much each additional unit of one product will cost in terms of the other product.
C)   specifies how much of each product society should produce.
D)   indicates that to produce more of one product society must give up larger and larger amounts of the other product.E) C) and D)
F) A) and B)

Question 6

Refer to the table below.In moving from possibility A to F,the cost of a unit of steel in terms of a unit of wheat:
(The following economy produces two products. ) 
Production Possibilities

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   increases from A to B,and decreases from B to F.E) All of the above
F) B) and C)

Question 7

-Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

Accepted Answer

A)   2 only.
B)   both 1 and 3.
C)   3 only.
D)   1 only.E) A) and D)
F) A) and C)

Question 8

Marginal costs exist because:

Accepted Answer

A)   the decision to produce more of some product means the sacrifice of other products.
B)   wants are scarce relative to resources.
C)   households and businesses make rational decisions.
D)   most decisions do not involve sacrifices or tradeoffs.E) A) and C)
F) B) and C)

Question 9

When economists describe "a market," they mean:

Accepted Answer

A)   a place where stocks and bonds are traded.
B)   information networks that allow individuals to keep in touch with each other.
C)   a hypothetical place where the production of goods and services takes place.
D)   a mechanism which coordinates actions of consumers and producers to establish equilibrium prices and quantities.E) C) and D)
F) B) and C)

Question 10

If the production possibilities curve is a straight line:

Accepted Answer

A)   the two products will sell at the same market prices.
B)   economic resources are perfectly shiftable between the production of the two products.
C)   the two products are equally important to consumers.
D)   equal quantities of the two products will be produced at each possible point on the curve.E) A) and D)
F) A) and C)

Question 11

-Refer to the above table.What is the opportunity cost of producing the third unit of capital goods?

Accepted Answer

A)   4 units of consumer goods
B)   5 units of consumer goods
C)   6 units of consumer goods
D)   7 units of consumer goodsE) None of the above
F) All of the above

Question 12

A positive statement is one which is:

Accepted Answer

A)   derived by an abstract generalization.
B)   suggestive of what should be done.
C)   subjective and is based on a value judgment.
D)   objective and is based on facts.E) B) and D)
F) A) and B)

Question 13

1/3 respectively. B)  3 and -11/3 respectively. C)  3 and + 3/4 respectively. D)  4 and + 3/4 respectively." class="answers-bank-image d-inline" rel="preload" >
-In the above diagram the vertical intercept and slope are:

Accepted Answer

A)   4 and -11/3 respectively.
B)   3 and -11/3 respectively.
C)   3 and + 3/4 respectively.
D)   4 and + 3/4 respectively.E) All of the above
F) A) and C)

Question 14

The budget line shift from cd to ab in the below figure is consistent with:

Accepted Answer

A)   decreases in the prices of both M and N.
B)   an increase in the price of M and a decrease in the price of N.
C)   a decrease in money income.
D)   an increase in money income.E) A) and D)
F) A) and C)

Question 15

-The above data suggest that:

Accepted Answer

A)   consumption varies inversely with after-tax income.
B)   consumption varies directly with after-tax income.
C)   consumption and after-tax income are unrelated.
D)   a tax increase will increase consumption.E) None of the above
F) A) and B)

Question 16

The slope of a straight line can be determined by:

Accepted Answer

A)   comparing the absolute horizontal change to the absolute vertical change between two points on the line.
B)   comparing the absolute vertical change to the absolute horizontal change between two points on the line.
C)   taking the reciprocal of the vertical intercept.
D)   comparing the percentage vertical change to the percentage horizontal change between two points on the line.E) A) and B)
F) A) and C)

Question 17

Which of the following statements is not correct?

Accepted Answer

A)   A reduction in money income will shift the budget line to the right.
B)   A reduction in money income accompanied by an increase in product prices will necessarily shift the budget line to the left.
C)   An increase in product prices will shift the budget line to the left.
D)   An increase in money income will shift the budget line to the right.E) A) and B)
F) All of the above

Question 18

Which of the following is not an illustration of the idea of opportunity cost?

Accepted Answer

A)   A growing economy can produce more consumer goods and more capital goods at the same time.
B)   If I buy a pizza,I will not be able to afford a movie.
C)   Resources devoted to consumer goods production are not available for capital goods production.
D)   The land a Manitoba farmer plants in wheat is not available for corn production.E) B) and C)
F) A) and B)

Question 19

If price (P) and quantity (Q) are directly related,this means that:

Accepted Answer

A)   a change in Q will alter P,but a change in P will not alter Q.
B)   if P increases,Q will decrease.
C)   if P increases,Q will also increase.
D)   an increase in P will cause Q to change,but the direction in which Q changes cannot be predicted.E) A) and B)
F) A) and C)

Question 20

A "hypothesis" is:

Accepted Answer

A)   a fundamental truth which all economists accept.
B)   a tentative,untested principle.
C)   the same as a normative statement.
D)   always the result of induction.E) B) and D)
F) A) and C)

Exam 1: Limits, Alternatives, and Choices

At fast-food restaurants:

Correct Answer
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-In the above diagram the vertical intercept and slope are:

Correct Answer
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When economists describe "a market," they mean:

Correct Answer
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-The above data suggest that:

Correct Answer
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Which of the following statements,if any,is correct for a nation which is producing only consumption and capital goods?

Correct Answer
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The budget line shift from cd to ab in the below figure is consistent with:

Correct Answer
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Which of the following is not an illustration of the idea of opportunity cost?

Correct Answer
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Which of the following is not correct? A typical production possibilities curve:

Correct Answer
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Marginal costs exist because:

Correct Answer
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If price (P) and quantity (Q) are directly related,this means that:

Correct Answer
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The slope of a straight line can be determined by:

Correct Answer
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-Refer to the above table.What is the opportunity cost of producing the third unit of capital goods?

Correct Answer
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A "hypothesis" is:

Correct Answer
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If the production possibilities curve is a straight line:

Correct Answer
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The process by which capital goods are accumulated is known as investment.

Correct Answer
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A positive statement is one which is:

Correct Answer
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Refer to the table below.In moving from possibility A to F,the cost of a unit of steel in terms of a unit of wheat: (The following economy produces two products. ) Production Possibilities

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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-Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

Correct Answer
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Exam 1: Limits, Alternatives, and Choices

At fast-food restaurants:

Correct AnswerverifiedShow Answer

-In the above diagram the vertical intercept and slope are:

Correct AnswerverifiedShow Answer

When economists describe "a market," they mean:

Correct AnswerverifiedShow Answer

-The above data suggest that:

Correct AnswerverifiedShow Answer

Which of the following statements,if any,is correct for a nation which is producing only consumption and capital goods?

Correct AnswerverifiedShow Answer

The budget line shift from cd to ab in the below figure is consistent with:

Correct AnswerverifiedShow Answer

Which of the following is not an illustration of the idea of opportunity cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not correct? A typical production possibilities curve:

Correct AnswerverifiedShow Answer

Marginal costs exist because:

Correct AnswerverifiedShow Answer

If price (P) and quantity (Q) are directly related,this means that:

Correct AnswerverifiedShow Answer

The slope of a straight line can be determined by:

Correct AnswerverifiedShow Answer

-Refer to the above table.What is the opportunity cost of producing the third unit of capital goods?

Correct AnswerverifiedShow Answer

A "hypothesis" is:

Correct AnswerverifiedShow Answer

If the production possibilities curve is a straight line:

Correct AnswerverifiedShow Answer

The process by which capital goods are accumulated is known as investment.

Correct AnswerverifiedShow Answer

A positive statement is one which is:

Correct AnswerverifiedShow Answer

Refer to the table below.In moving from possibility A to F,the cost of a unit of steel in terms of a unit of wheat: (The following economy produces two products. ) Production Possibilities

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

-Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

Correct AnswerverifiedShow Answer

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